Wholesale Mortgage Lending

This may be a good option if your client expects interest rates to rise in the future, plans to stay in the home for an extended period of time or prefers the stability of monthly payments.

• Interest rate stays the same for the entire term
• Monthly principal and interest payments will remain the same for the life of the loan
• Available in a variety of term lengths

Considerations

• How the length of the loan term will affect the payment amount and how much interest will be paid over the full term
• The monthly payment is typically higher on a shorter-term loan than on a longer-term loan
• The total interest paid is higher on a longer-term loan than on a shorter-term loan

An ARM may be a good option to consider if your client thinks interest rates will fall in the future, plans to stay in the home for only a short period of time or expects future income growth.

• The interest rate rises and falls with the market interest rates
• Monthly principal and interest payments will change depending on the market interest rate at any given time
• A lower interest rate during the initial period means lower payments compared to payments of a Fixed-Rate Mortgage. After the initial payment period has expired, the mortgage rate for the loan will fluctuate to the index rate
• Includes an interest rate cap that sets a limit on how high the rate can go, limiting the maximum amount the monthly payment will increase at each interest rate adjustment over the life of the loan
• Available in a variety of term lengths

Considerations

• The effects of the adjustable rate over time
• Monthly payments may increase when the interest rate adjusts
• Monthly payments may change every year after the initial fixed period is over

Offered through the Federal Housing Administration, these loans are available to borrowers of all income levels. This may be a good option to consider if your client expects to buy a lower priced home with a small down payment or has less cash available up front for the down payment and closing costs.

• Available for a variety of loan terms
• Requires mortgage insurance
• Flexible income, debt and credit requirements
• Down payment and closing costs may come from a gift or grant
• A co-applicant can help buyers qualify even though they do not live in the home
• Available in a variety of fixed-rate and adjustable-rate loan options

Considerations

• The borrower typically must pay both upfront and monthly FHA mortgage insurance premiums
• The borrower typically can only have one FHA mortgage at a time

Offered through the Veterans Administration, VA Loans are available to borrowers who are eligible service members. Veterans must provide a veteran’s certificate of eligibility and the appraisal is assigned by the VA.

• Financing for eligible service member (includes veterans, reservists, active duty personnel or eligible family members)
• Low or no down payment options available
• No mortgage insurance requirement
• Flexible income, debt and credit requirements
• Down payment and closing costs may come from a gift or grant
• Available in a variety of fixed-rate and adjustable-rate loan options
• Potential for minimal out-of-pocket expenses with seller contributions

Considerations

• The borrower typically must pay a one-time VA funding fee that can be financed into the amount of the loan
• Financing is available only for primary residences

Offered through the United States Department of Agriculture, a USDA Loan may be a good option for clients who buy a home in a rural area or have less cash available for a down payment and closing costs.

• Lending up to 100 percent of the appraised value of the home
• One-time guarantee fee may be rolled into the loan amount
• Restrictions based on income and location

This is an excellent (and sometimes the only) option for clients purchasing homes valued in excess of conforming loan limits.

• Available for primary and secondary homes
• Purchase or refinance allowed
• Financing available in fixed-rate and ARM options
• Max LTV of 65%-70% for loans up to $2,000,000
• Max LTV of 70%-80% for loans up to $1,500,000